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In the long? run, all firms in a perfectly competitive industry? (assuming they have the same cost? curves) will be earning__ profits and will be producing at the ___ point of their?short-run ___ curve and the ___ point of their? long-run____ curve
In the long? run, all firms in a perfectly competitive industry? (assuming they have the same cost? curves) will be earning__ profits and will be producing at the ___ point of their?short-run ___ curve and the ___ point of their? long-run____ curve.
1/zero/positive/negative
2/maximum/minimum
3/average total cost marginal cost
4/maximum/minimum
5/average total cost marginal cost
Expert Solution
In the long? run, all firms in a perfectly competitive industry?(assuming they have the same cost? curves) will be earning zero (normal) profits and will be producing at the minimum point of their? short-run average total cost (SAC) curve and the minimum point of their? long-run average total cost (LAC) curve.
Explanation: In the long run, all the firms will be earning a normal profit where the Average cost of production is equal to the Average revenue (AR=Price). In the following figure we can see that at point E, the firm reaches its equilibirum where MR=AR=Price=SAC=LAC=SMC=LMC. Thus, at this point the Price is P0 and the quantity the firm producing is OM.
please see the attached file .
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